Morning Bites (part 1)
🔗China’s finished steel net exports were up 17% YoY in December, decelerating from the 65% YoY increase in November. Meanwhile, China’s average daily steel production and inventories materially grew YoY in November-December. Hence, some additional steel volumes might have been exported because domestic demand had not completely recovered
🪨China’s coal imports were flat YoY in December (vs. -8% YoY in November). However, the figure represents a MoM decline of 4%. According to Reuters, the dynamics were generally affected by slowed industrial activity following a recent surge in local Covid-19 cases
#coal #steel
https://metals-wire.com:3000/news-reports
🔗China’s finished steel net exports were up 17% YoY in December, decelerating from the 65% YoY increase in November. Meanwhile, China’s average daily steel production and inventories materially grew YoY in November-December. Hence, some additional steel volumes might have been exported because domestic demand had not completely recovered
🪨China’s coal imports were flat YoY in December (vs. -8% YoY in November). However, the figure represents a MoM decline of 4%. According to Reuters, the dynamics were generally affected by slowed industrial activity following a recent surge in local Covid-19 cases
#coal #steel
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🏗China’s total excavator sales declined 30% YoY in December, which was substantially below preliminary estimates. This represented a reversal from the 16% YoY growth in November. Separately, domestic excavator sales, on our numbers, fell 60% YoY in December, after the slight 3% YoY growth the previous month. As a leading indicator of construction activity, consistently weak YoY domestic excavator sales support our view that there is likely to be no rapid recovery for the depressed Chinese real estate segment. This, in turn, is negative for industrial metals demand (particularly steel). Furthermore, we reiterate our view that the support measures announced by Beijing throughout 2022 are not enough to trigger a recovery in China's real estate sector
#global
https://metals-wire.com:3000/news-reports
🏗China’s total excavator sales declined 30% YoY in December, which was substantially below preliminary estimates. This represented a reversal from the 16% YoY growth in November. Separately, domestic excavator sales, on our numbers, fell 60% YoY in December, after the slight 3% YoY growth the previous month. As a leading indicator of construction activity, consistently weak YoY domestic excavator sales support our view that there is likely to be no rapid recovery for the depressed Chinese real estate segment. This, in turn, is negative for industrial metals demand (particularly steel). Furthermore, we reiterate our view that the support measures announced by Beijing throughout 2022 are not enough to trigger a recovery in China's real estate sector
#global
https://metals-wire.com:3000/news-reports
👍1
Week ahead data releases in M&M
As the 4Q22/2H22 reporting season begins, we commence a series of posts devoted to the forthcoming data releases. This week, among the major M&M names, Alcoa is to release its 4Q22 financial results on Wednesday 18 January. For the company, our 4Q22 EBITDA forecast is slightly below the consensus estimate
#reporting_season
https://metals-wire.com:3000/events
As the 4Q22/2H22 reporting season begins, we commence a series of posts devoted to the forthcoming data releases. This week, among the major M&M names, Alcoa is to release its 4Q22 financial results on Wednesday 18 January. For the company, our 4Q22 EBITDA forecast is slightly below the consensus estimate
#reporting_season
https://metals-wire.com:3000/events
Morning Bites (part 1)
📌China’s new internal combustion engine car sales shrank again, and were down 23% YoY in December, after the 26% YoY decline in November. This figure is likely to reflect the increasing popularity of EVs in the region. China’s auto sector accounts for roughly 26% and 17% of global autocatalyst Pd and Pt demand, respectively. Hence, soft ICE car sales in China imply a negative read-across for future PGM demand, especially were the trend to persist
📌China’s new EV sales rose 52% YoY in December, after the 72% YoY growth in November. The continuing strong EV sales trend in China (since mid-2020) is supportive for the world demand for the battery metals basket (in particular for nickel, lithium and cobalt), as China accounted for ~60% of the global EV sales in November
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
📌China’s new internal combustion engine car sales shrank again, and were down 23% YoY in December, after the 26% YoY decline in November. This figure is likely to reflect the increasing popularity of EVs in the region. China’s auto sector accounts for roughly 26% and 17% of global autocatalyst Pd and Pt demand, respectively. Hence, soft ICE car sales in China imply a negative read-across for future PGM demand, especially were the trend to persist
📌China’s new EV sales rose 52% YoY in December, after the 72% YoY growth in November. The continuing strong EV sales trend in China (since mid-2020) is supportive for the world demand for the battery metals basket (in particular for nickel, lithium and cobalt), as China accounted for ~60% of the global EV sales in November
#cars #EV #nickel #lithium #cobalt
https://metals-wire.com:3000/news-reports
Morning Bites (part 2)
🇵🇪 Glencore’s Antapaccay mine in Peru was hit by vandals, a company official has reported. As a result, two mine vehicles and a water facility were burned in the attack. According to the local press, most of the 2,400 workers have been evacuated from the site, leaving just essential personnel required to maintain basic operations. On our numbers, Antapaccay’s production, which is now at risk, accounted for 0.8% of world mine copper output in 2021. Hence, the news might be supportive for the metal’s price
⛔️MMG’s Las Bambas has halted mining activities because of safety concerns, according to the mine's union leader. The decision was made following unrest at another nearby mining site. However, MMG's representative declined to comment. Overall, Las Bambas accounted for 1.4% of global copper mined supply in 2021, which is likely to add slight upbeat sentiment to the red metal's price
#copper
https://metals-wire.com:3000/sector/Copper
🇵🇪 Glencore’s Antapaccay mine in Peru was hit by vandals, a company official has reported. As a result, two mine vehicles and a water facility were burned in the attack. According to the local press, most of the 2,400 workers have been evacuated from the site, leaving just essential personnel required to maintain basic operations. On our numbers, Antapaccay’s production, which is now at risk, accounted for 0.8% of world mine copper output in 2021. Hence, the news might be supportive for the metal’s price
⛔️MMG’s Las Bambas has halted mining activities because of safety concerns, according to the mine's union leader. The decision was made following unrest at another nearby mining site. However, MMG's representative declined to comment. Overall, Las Bambas accounted for 1.4% of global copper mined supply in 2021, which is likely to add slight upbeat sentiment to the red metal's price
#copper
https://metals-wire.com:3000/sector/Copper
🗞Today China has published its industrial production data for December (see the table above)
#statistics #China
https://metals-wire.com:3000/news-reports
#statistics #China
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
🔗China’s crude steel output dropped 10% YoY in December, after the 8% YoY growth in November. The decline in annual terms was due to soft demand from the slowing economy and the weak real estate segment. In December 2022, apparent steel consumption was down 11% YoY, reversing from the 5% YoY increase in November. On our numbers, FY22 output was down 2.3% YoY. Hence, China reached its goal of flat or lower steel output in 2022 YoY
🏢China's property sales dropped 32% YoY in December (vs. -33% YoY in November). Floor space starts were down 44% YoY last month, decelerating from the 51% YoY decline in November. Similarly, personal mortgage loans were 29% lower YoY in December (vs. -42% in November). At the same time, property completions declined 7% YoY in December (vs. -20% YoY in November). Meanwhile, we have still not seen any substantial measures that could trigger a recovery in China's property sector in the near future
#steel #property
https://metals-wire.com:3000/sector/Steel
🔗China’s crude steel output dropped 10% YoY in December, after the 8% YoY growth in November. The decline in annual terms was due to soft demand from the slowing economy and the weak real estate segment. In December 2022, apparent steel consumption was down 11% YoY, reversing from the 5% YoY increase in November. On our numbers, FY22 output was down 2.3% YoY. Hence, China reached its goal of flat or lower steel output in 2022 YoY
🏢China's property sales dropped 32% YoY in December (vs. -33% YoY in November). Floor space starts were down 44% YoY last month, decelerating from the 51% YoY decline in November. Similarly, personal mortgage loans were 29% lower YoY in December (vs. -42% in November). At the same time, property completions declined 7% YoY in December (vs. -20% YoY in November). Meanwhile, we have still not seen any substantial measures that could trigger a recovery in China's property sector in the near future
#steel #property
https://metals-wire.com:3000/sector/Steel
Morning Bites (part 2)
🔗CISA mills daily crude steel production was up 0.5% to 1.93mnt in early January, from the last ten days of December. However, this was down 2.1% YoY, vs. the -8.4% YoY in the previous ten days. In turn, the steel stock grew 14.2% over the period (15.2% above the 2022 level, as of 10 January). Hence, we reiterate our view that the YoY inventories growth (since end-1Q22) might indicate soft demand for steel in China
💎De Beers cut the prices of larger rough diamonds by 10% at its 1st sales cycle in 2023, the company declined to comment. However, prices of small stones grew by the same percentage, while in-between sizes (0.75-2ct) also faced a modest drop. In our view, the difference in price dynamics might be due to inflationary pressure and economic slowdown, which adversely affected demand for the most expensive large stones. Overall, De Beers’ rough prices were up 3% YoY on its first sales cycle in 2023, on our numbers
#steel #diamonds
https://metals-wire.com:3000/news-reports
🔗CISA mills daily crude steel production was up 0.5% to 1.93mnt in early January, from the last ten days of December. However, this was down 2.1% YoY, vs. the -8.4% YoY in the previous ten days. In turn, the steel stock grew 14.2% over the period (15.2% above the 2022 level, as of 10 January). Hence, we reiterate our view that the YoY inventories growth (since end-1Q22) might indicate soft demand for steel in China
💎De Beers cut the prices of larger rough diamonds by 10% at its 1st sales cycle in 2023, the company declined to comment. However, prices of small stones grew by the same percentage, while in-between sizes (0.75-2ct) also faced a modest drop. In our view, the difference in price dynamics might be due to inflationary pressure and economic slowdown, which adversely affected demand for the most expensive large stones. Overall, De Beers’ rough prices were up 3% YoY on its first sales cycle in 2023, on our numbers
#steel #diamonds
https://metals-wire.com:3000/news-reports
Morning Bites (part 3)
💍China’s jewellery retailers reported YoY drops of 21-24% in LFL (same store) sales of gem-set jewellery in 4Q22. Chow Tai Fook reported a 24% YoY decline in LFL sales of gem-set, platinum and K-gold jewellery in 4Q22. Sales in Mainland China were down 32% YoY, while HK and Macau sales fell 3% YoY. Meanwhile, Luk Fook reported a 21% YoY decrease in LFL gem-set jewellery sales in 4Q22. In Mainland China, gem-set jewellery sales shrank 38% YoY, while in HK and Macau they slid 23% YoY. The decline in Mainland China’s sales was mostly caused by a local spike in Covid cases, while HK and Macau were also hit by the resurging pandemic on the Mainland. We note that weak jewellery sales in Asia is a negative factor for diamond demand, as China accounted for ~15% of global diamond jewellery retail sales in 2021
#diamonds
https://metals-wire.com/sector/Diamonds
💍China’s jewellery retailers reported YoY drops of 21-24% in LFL (same store) sales of gem-set jewellery in 4Q22. Chow Tai Fook reported a 24% YoY decline in LFL sales of gem-set, platinum and K-gold jewellery in 4Q22. Sales in Mainland China were down 32% YoY, while HK and Macau sales fell 3% YoY. Meanwhile, Luk Fook reported a 21% YoY decrease in LFL gem-set jewellery sales in 4Q22. In Mainland China, gem-set jewellery sales shrank 38% YoY, while in HK and Macau they slid 23% YoY. The decline in Mainland China’s sales was mostly caused by a local spike in Covid cases, while HK and Macau were also hit by the resurging pandemic on the Mainland. We note that weak jewellery sales in Asia is a negative factor for diamond demand, as China accounted for ~15% of global diamond jewellery retail sales in 2021
#diamonds
https://metals-wire.com/sector/Diamonds
Morning Bites
🇿🇦South Africa’s PGM mining output declined 22% YoY in November, decelerating from the 34% YoY drop in October. Meanwhile, the country’s gold production shrank 5% YoY after the revised -7% YoY in October. Overall, the country's metals production continued to drag, amid persistent domestic issues with electricity supply, logistical challenges and inflationary pressures. We note that South Africa accounts for ~70% and 38% of global platinum and palladium supply, respectively, as well as for 3% of gold output. In our view, the continuous production disruptions are likely to add support for PGMs and gold prices, especially were this trend to persist
#PGMs #gold
https://metals-wire.com:3000/news-reports
🇿🇦South Africa’s PGM mining output declined 22% YoY in November, decelerating from the 34% YoY drop in October. Meanwhile, the country’s gold production shrank 5% YoY after the revised -7% YoY in October. Overall, the country's metals production continued to drag, amid persistent domestic issues with electricity supply, logistical challenges and inflationary pressures. We note that South Africa accounts for ~70% and 38% of global platinum and palladium supply, respectively, as well as for 3% of gold output. In our view, the continuous production disruptions are likely to add support for PGMs and gold prices, especially were this trend to persist
#PGMs #gold
https://metals-wire.com:3000/news-reports
Morning Bites (part 1)
🚘EU + UK passenger car registrations increased 13% YoY in December, decelerating from the 17% YoY gain in November. The results were slightly below our estimates. Sales, however, were still down 16% vs. the pre-COVID 2019 level (-17% in November): although the market improved starting from August, most of the YoY gain was due to the low base effect. Hence, we keep our bearish view on EU car sales in the short term, amid the unfavourable macroeconomic conditions globally. Hence, soft EU car sales might weigh on demand for PGM from the auto industry
🏭Eramet is likely to invest in a new nickel processing plant in Indonesia. The French miner, together with Germany’s BASF, is finalising a USD 2.6bln deal to invest into the facility with 67kt of nickel in NPH capacity, for use in EV batteries. The first output is to be in early 2026, depending on the decision. On our numbers, this is equivalent to ~2% of refined nickel supply in 2022F
#cars #nickel
https://metals-wire.com:3000/news-reports
🚘EU + UK passenger car registrations increased 13% YoY in December, decelerating from the 17% YoY gain in November. The results were slightly below our estimates. Sales, however, were still down 16% vs. the pre-COVID 2019 level (-17% in November): although the market improved starting from August, most of the YoY gain was due to the low base effect. Hence, we keep our bearish view on EU car sales in the short term, amid the unfavourable macroeconomic conditions globally. Hence, soft EU car sales might weigh on demand for PGM from the auto industry
🏭Eramet is likely to invest in a new nickel processing plant in Indonesia. The French miner, together with Germany’s BASF, is finalising a USD 2.6bln deal to invest into the facility with 67kt of nickel in NPH capacity, for use in EV batteries. The first output is to be in early 2026, depending on the decision. On our numbers, this is equivalent to ~2% of refined nickel supply in 2022F
#cars #nickel
https://metals-wire.com:3000/news-reports
Morning Bites (Part 2)
💎India’s rough diamond net imports fell 27% YoY in December, reversing from the 34% YoY growth in November. Meanwhile, India’s polished diamond net exports were also down, dropping 28% YoY in December, accelerating from the -12% YoY in November. According to GJEPC Chairman Vipul Shah, demand from China remains muted, while supply concerns might intensify when the demand for polished stones starts to recover. We note that the diamonds sector is likely to remain stressed in the short term, amid the unfavourable economic conditions globally and weak 4Q22 gem-set jewellery sales in China (~15% of world sales)
At the same time, India’s lab-grown rough diamond net imports decreased 12% YoY in December (vs. -9% YoY in November). The share of lab-grown net rough imports in natural diamond imports was slightly up to 7% in December (vs. 6% YoY)
#diamonds
https://metals-wire.com/sector/Diamonds
💎India’s rough diamond net imports fell 27% YoY in December, reversing from the 34% YoY growth in November. Meanwhile, India’s polished diamond net exports were also down, dropping 28% YoY in December, accelerating from the -12% YoY in November. According to GJEPC Chairman Vipul Shah, demand from China remains muted, while supply concerns might intensify when the demand for polished stones starts to recover. We note that the diamonds sector is likely to remain stressed in the short term, amid the unfavourable economic conditions globally and weak 4Q22 gem-set jewellery sales in China (~15% of world sales)
At the same time, India’s lab-grown rough diamond net imports decreased 12% YoY in December (vs. -9% YoY in November). The share of lab-grown net rough imports in natural diamond imports was slightly up to 7% in December (vs. 6% YoY)
#diamonds
https://metals-wire.com/sector/Diamonds
❤1
📌Copper output remains subdued, underperforming industry estimates
⛏World refined copper production demonstrated growth rates of 0.5-2.4% YoY in 2019-22F, firmly below industry forecasts. For 2023, industry reports suggest robust production growth, supported by several projects being ramped up or launched (Kamoa, QB2, Udokan, etc). However, previous industry estimates have been consistently overly bullish
📉Furthermore, the structural negative factors (unpleasant weather conditions and social unrest) are adversely affecting production in two major countries, Chile and Peru (~40% of global mined Cu supply). As a result, the two countries’ combined production is close to its six-year lows
❗️Were the negative factors in mining to persist, that might partially offset the positive effects of new project launches, restraining Cu supply growth in 2023, in our view
#copper
https://metals-wire.com/sector/Copper
⛏World refined copper production demonstrated growth rates of 0.5-2.4% YoY in 2019-22F, firmly below industry forecasts. For 2023, industry reports suggest robust production growth, supported by several projects being ramped up or launched (Kamoa, QB2, Udokan, etc). However, previous industry estimates have been consistently overly bullish
📉Furthermore, the structural negative factors (unpleasant weather conditions and social unrest) are adversely affecting production in two major countries, Chile and Peru (~40% of global mined Cu supply). As a result, the two countries’ combined production is close to its six-year lows
❗️Were the negative factors in mining to persist, that might partially offset the positive effects of new project launches, restraining Cu supply growth in 2023, in our view
#copper
https://metals-wire.com/sector/Copper
📌China's reopening might further support the red metal's price
📈Copper demand was negatively affected by the global economic downturn in 2022. However, Beijing's recent cancellation of its Zero-Covid policy is likely to bolster demand and, hence, keep prices at current elevated levels; the Cu price is up >20% since mid-2022 and >10% since early December 2022, when China announced the possible easing of Covid-19 restrictions
🏅We note that China remains by far the biggest Cu consumer, with ~55% of global refined Cu consumption
❗️At the same time, copper inventories are close to their lowest level in more than ten years: current stocks are sufficient for only three days of global consumption (vs. the averages of 9 in 2010-20 and 5 in 2021). Hence, the potential demand boost from China might trigger some price squeezes in 2023
📝In our next post, we shall elaborate on the valuation of major Cu producers
#copper
https://metals-wire.com/sector/Copper
📈Copper demand was negatively affected by the global economic downturn in 2022. However, Beijing's recent cancellation of its Zero-Covid policy is likely to bolster demand and, hence, keep prices at current elevated levels; the Cu price is up >20% since mid-2022 and >10% since early December 2022, when China announced the possible easing of Covid-19 restrictions
🏅We note that China remains by far the biggest Cu consumer, with ~55% of global refined Cu consumption
❗️At the same time, copper inventories are close to their lowest level in more than ten years: current stocks are sufficient for only three days of global consumption (vs. the averages of 9 in 2010-20 and 5 in 2021). Hence, the potential demand boost from China might trigger some price squeezes in 2023
📝In our next post, we shall elaborate on the valuation of major Cu producers
#copper
https://metals-wire.com/sector/Copper
📌How do copper miners look at spot prices?
💰On our numbers, most of the pure-play copper producers (such as Antofagasta, Freeport and Southern Copper) appear expensive at spot, trading at 6-10x 1-y fwd EV/EBITDA. In comparison, MMG seems much cheaper: it trades at 3.6x 1-y fwd EV/EBITDA with a 35% FCF yield. However, the company continues to struggle from operational issues at its Las Bambas mine (~78% of the miner's EBITDA at spot), which remains major reason behind relatively generous valuation
💰Although Glencore and Teck Resources have less exposure to copper, they are much cheaper than the pure-play miners, trading at 2.4x and 2.2x 1-y fwd EV/EBITDA, respectively, which makes them the most attractive stories in the sector, in our view. In addition, both firms have a ~40% exposure to coal, which is also supportive for the case, as coal prices are likely to stay elevated in 2023F
#copper
https://metals-wire.com/sector/Copper
💰On our numbers, most of the pure-play copper producers (such as Antofagasta, Freeport and Southern Copper) appear expensive at spot, trading at 6-10x 1-y fwd EV/EBITDA. In comparison, MMG seems much cheaper: it trades at 3.6x 1-y fwd EV/EBITDA with a 35% FCF yield. However, the company continues to struggle from operational issues at its Las Bambas mine (~78% of the miner's EBITDA at spot), which remains major reason behind relatively generous valuation
💰Although Glencore and Teck Resources have less exposure to copper, they are much cheaper than the pure-play miners, trading at 2.4x and 2.2x 1-y fwd EV/EBITDA, respectively, which makes them the most attractive stories in the sector, in our view. In addition, both firms have a ~40% exposure to coal, which is also supportive for the case, as coal prices are likely to stay elevated in 2023F
#copper
https://metals-wire.com/sector/Copper
Alcoa 4Q22 results - EBITDA hit by higher costs
✏️4Q22 revenues fell 20% YoY due to lower realised prices and sales volumes, broadly in line with consensus and us. Adjusted EBITDA, however, was down 97% YoY in 4Q22, 73% short of consensus and 72% lower than us, on the back of higher costs. The main contributor to the costs overshoot was the aluminium segment, due to higher materials and power costs
⛏The company released its FY23 sales guidance: aluminium and alumina shipments are both expected to shrink ~2% YoY, on average
❗️On our numbers, 1Q23 EBITDA is likely to show a substantial improvement QoQ, mainly due to the growth in prices: the Al spot price is ~11% higher than the 4Q22 average
$AA #Aluminium
https://metals-wire.com/company/AA_US
✏️4Q22 revenues fell 20% YoY due to lower realised prices and sales volumes, broadly in line with consensus and us. Adjusted EBITDA, however, was down 97% YoY in 4Q22, 73% short of consensus and 72% lower than us, on the back of higher costs. The main contributor to the costs overshoot was the aluminium segment, due to higher materials and power costs
⛏The company released its FY23 sales guidance: aluminium and alumina shipments are both expected to shrink ~2% YoY, on average
❗️On our numbers, 1Q23 EBITDA is likely to show a substantial improvement QoQ, mainly due to the growth in prices: the Al spot price is ~11% higher than the 4Q22 average
$AA #Aluminium
https://metals-wire.com/company/AA_US